America can’t wait for innovation reform

Dr. Michael Heller of the University of California San Diego is a brilliant scientist who discovered a new way of synthesizing molecular structures. Eager to exploit the commercial applications of his discovery, he founded a medical technology firm and filed for a patent.

He got it – 10 years later. By then, it was too late: In June 2009, Heller’s company, which had employed 89 people, filed for bankruptcy and shut its doors.

Heller is just one of many American inventors who’ve been bogged down by the country’s outmoded and inefficient patent system. Currently there are more than 1.2 million applications pending at the federal government’s Patent and Trademark Office (PTO in Virginia.

The lag time is severe: Most patents take three years to be awarded. But many inventors must wait 10 years or more. At least one patent, for an ultrafast space vessel, took 27 years for approval.

The expensive, drawn-out process makes the already arduous process of innovation even harder. That’s why, earlier this year, the Senate passed the America Invents Act, a law designed to streamline patenting and make it easier for inventors to take ownership of their work. Last week, a companion bill passed the House.

The act’s most important change is a shift in the eligibility criteria for a patent. Historically, the United States has been an outlier in awarding patents based on what’s known as a “first-to-invent” system, rather than the “first-to-file” system used worldwide. The problem is that it can be extremely difficult to determine with certainty who actually arrived at an invention first when two inventors claim to have discovered the same thing independently.

The ensuing process of officially sorting it out – known as “interference” – is time-consuming and expensive: According to David Kappos, undersecretary of commerce for intellectual property and director of the PTO, the average cost of slogging through an interference process in order to determine the first inventor is nearly $500,000.

The America Invents Act switches the country to the “first-to-file” system. This process wipes away the time and expense of the interference process by awarding the patent to the first inventor to file an application. It’s straightforward. It’s transparent. It’s faster. And it will help keep America competitive internationally.

Some worry that a first-to-file system will put small businesses and individual inventors at a disadvantage. In fact, the independent inventors among us stand to gain most under a reformed system.

“First-to-file” won’t change outcomes very much at all. There were 3 million total patent filings in the past seven years. According to Kappos, in only one instance would the adoption of a first-to-file system have changed the outcome of an independent inventor’s application. A statistical analysis of patents issued from 1983 to 2004 by former PTO Commissioner Gerald Mossinghoff revealed that “first-to-invent” actually disadvantaged small entities and independent inventors relative to big corporations and institutions. Independent and small business inventors would also receive a substantial benefit from the new law: a 75 percent discount on patent application fees.